In a recent discussion with analysts after announcing Tabcorp's acquisition of BetMakers, company executives emphasized that this move is the "cheapest and most efficient" strategy for updating Tabcorp's technology infrastructure.
Tabcorp has wholly acquired BetMakers at a price of AU$0.24 (US$0.17) per share, which places BetMakers' valuation at about $283 million, with an enterprise value estimated around $267 million.
The acquisition is projected to yield annual cost synergies of up to $30 million by the end of the second year post-acquisition, mainly driven by technology enhancements. This includes integrating BetMakers' advanced product offerings, consolidating data center operations, streamlining corporate functions, and rationalizing contracts.
On the analyst call, Tabcorp’s CEO Gillon McLachlan outlined that the choice of BetMakers over developing its in-house technology was primarily based on the expected cost benefits. The deal is seen as a quicker, more cost-effective solution compared to the alternative of overhauling Tabcorp’s older systems internally.
Robert Fraser, Tabcorp’s CTO, pointed out the advantages of BetMakers’ cloud-native and lightweight technology platform, noting that it operates profitably and poses less execution risk than internal upgrades. He acknowledged Tabcorp’s current reliance on a variety of legacy technologies, which include a mix of on-premises and cloud infrastructures.
Fraser stated, "The cost synergies will be delivered with BetMakers much faster and cheaper than we would be able to do ourselves, based on a thorough analysis of alternative options." CFO Mark Howell echoed this sentiment, describing the acquisition as both the "cheapest and most efficient way home" with the lowest risk for modernizing the tech stack.
In conjunction with the acquisition, Tabcorp intends to utilize BetMakers’ technology and distribution channels to develop an integrated offering that brings together racing media, data, wagering technology, and tote services, with the goal of enhancing their presence in international markets. The integration of BetMakers' racing data into Tabcorp's Sky Racing media coverage aims to improve data analytics capabilities.
McLachlan explained, "Ultimately, we’re discussing a full suite of vision, data, technology, and wagering services distributed globally. BetMakers offers complementary assets, with different opportunities in each market." Fraser added, "A lot of the capability we value in BetMakers revolves around customer intelligence, content, and media capabilities."
The executives indicated that retaining key members of the BetMakers team during the integration process is a priority, although most leaders of the new technology division within Tabcorp will be new hires. Fraser will oversee the technology team.
McLachlan noted, "We have a clear team with established targets and a structure we believe will guide us through this process." Additionally, many involved in the integration team had previously worked on the demerger process, providing them with in-depth familiarity with the required systems.
McLachlan expressed enthusiasm about welcoming BetMakers talent, especially those experienced in AI adoption. He remarked, "They are proven in digital transformation, and we will leverage that expertise. Their commitment to efficiency and agility aligns with the culture we are striving to cultivate at Tabcorp."
